2006 Legislation
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HOUSE BILL NO. 825 – Health care plans, self-funded


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Bill Status

H0825......................................................by STATE AFFAIRS
SELF-FUNDED HEALTH CARE PLANS - Adds to existing law relating to joint
public agency self-funded health care plans to set forth a declaration of
purpose; to define terms; to require registration; to set forth exemptions;
to provide qualifications for registration; to provide for application for
registration; to provide for grants or denials of applications; to provide
for trust fund powers and liability; to provide for investment of trust
fund moneys; to require reserves; to provide for records, accounts and
annual statements; to exempt plans from taxes; to provide for examination
of books, records and accounts; to provide for a board of trustees and
administrators; to provide for recovery of depleted funds; to provide for
termination of registration; to provide for the liquidation of a trust
fund; to authorize rules; to set forth penalties; and to set forth mandated
coverage provisions.
03/15    House intro - 1st rdg - to printing
    Rpt prt - to St Aff
03/16    Rpt out - rec d/p - to 2nd rdg
03/17    2nd rdg - to 3rd rdg
03/22    3rd rdg - PASSED - 66-2-2
      AYES -- Anderson, Andrus, Barraclough, Bastian, Bayer, Bell, Bilbao,
      Black, Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon,
      Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge,
      Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Henderson,
      Jaquet, Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews,
      McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen, Nonini,
      Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche,
      Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
      Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail,
      NAYS -- Barrett, Wood
      Absent and excused -- Bedke, Mr. Speaker
    Floor Sponsor - Black
    Title apvd - to Senate
03/23    Senate intro - 1st rdg - to Com/HuRes
03/30    Rpt out - rec d/p - to 2nd rdg
03/31    2nd rdg - to 3rd rdg
04/03    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
      Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
      Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
      Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce,
      Richardson, Schroeder, Stegner, Stennett, Werk, Williams
      NAYS -- None
      Absent and excused -- Sweet
    Floor Sponsor - Cameron
    Title apvd - to House
04/03    To enrol
04/04    Rpt enrol - Sp/Pres signed - To Governor
04/10    Governor signed
         Session Law Chapter 415
         Effective: 07/01/06

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 825
                                 BY STATE AFFAIRS COMMITTEE
  1                                        AN ACT
 19    Be It Enacted by the Legislature of the State of Idaho:
 20        SECTION 1.  That Title 41, Idaho Code, be, and the same is hereby  amended
 21    by  the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
 22    ter 41, Title 41, Idaho Code, and to read as follows:
 23                                      CHAPTER 41
 25        41-4101.  DECLARATION OF PURPOSE. It is the purpose  of  this  chapter  to
 26    recognize  and  provide  reasonable  public  supervision  of self-funded plans
 27    established by public agencies pursuant to a joint powers agreement in  accor-
 28    dance with chapter 23, title 67, Idaho Code, for provision of health care ser-
 29    vice  benefits  to  employees  of  public agencies in connection with or as an
 30    alternative to insurance and other prepayment plans.
 31        41-4102.  DEFINITIONS. As used in this chapter:
 32        (1)  "Administrator" means a person, other than a board  member,  employed
 33    by the board to administer a joint public agency self-funded plan.
 34        (2)  "Beneficiary"  means  any individual entitled, under the joint public
 35    agency self-funded plan, to payment by the trust fund of any part  of  all  of
 36    the cost of any health care service rendered to him.
 37        (3)  "Board  of trustees" or "board" is the board of trustees of the trust
 38    fund.
 39        (4)  "Contribution" means the amount paid or payable by  the  employer  or
 40    employee into the trust fund.
 41        (5)  "Director"  means the director of the department of insurance of this
  1    state.
  2        (6)  "Joint powers agreement" means an agreement entered into between pub-
  3    lic  agencies pursuant to chapter 23, title 67, Idaho Code.
  4        (7)  "Joint public agency  self-funded  plan"  or  "self-funded  plan"  or
  5    "plan"  means  any  public agency plan established by a joint powers agreement
  6    and under which payment for any disability benefits not otherwise provided for
  7    under title 72, Idaho Code (worker's compensation and related laws  --  indus-
  8    trial commission), medical, surgical, hospital, and other services for preven-
  9    tion,  diagnosis,  or treatment of any disease, injury, or bodily condition of
 10    an employee is, or is to be, regularly provided for  or  promised  from  funds
 11    created or maintained in whole or in part by contributions or payments thereto
 12    by  a public agency employer, or by a public agency employer and the employees
 13    of the public agency, and not otherwise covered by insurance or contract  with
 14    a health care service corporation, health maintenance organization, or similar
 15    other third party prepayment plan.
 16        (8)  "Person" means any individual, corporation, association, firm, syndi-
 17    cate, organization or other entity.
 18        (9)  "Public  agency"  means  any city, county or political subdivision of
 19    this state, including, but not limited to: counties; school districts; highway
 20    districts;  port authorities; instrumentalities of counties, county hospitals,
 21    cities or any political subdivision created under the laws  of  the  state  of
 22    Idaho;  and the state of Idaho and any agency of the state government. "Public
 23    agency" also means any group of more than one (1) of the above public agencies
 24    acting together pursuant to a joint powers agreement in accordance with  chap-
 25    ter 23, title 67, Idaho Code.
 26        (10) "Trust  fund"  means  a  fund established under a joint public agency
 27    self-funded plan for receipt of contributions of employers and  employees  and
 28    payment of or with respect to health care service costs of beneficiaries.
 30    CODE. (1) No joint public agency self-funded plan shall operate in this  state
 31    except  while registered with the director as hereinafter provided. Joint pub-
 32    lic agency self-funded plans already in operation as of July 1, 2006, shall so
 33    register within ninety (90) days of the effective date of this act.
 34        (2)  No registration shall be required of:
 35        (a)  Any plan established and maintained for the purpose of complying with
 36        any worker's compensation  law  or  unemployment  compensation  disability
 37        insurance law; or
 38        (b)  Any  plan  that  is  primarily for the purpose of providing first aid
 39        care and treatment, at a dispensary of an employer, for injury or sickness
 40        of employees while engaged in their employment.
 41        (3)  Plans while so registered shall not be deemed to be  engaged  in  the
 42    business  of  insurance  and  shall  not be subject to provisions of the Idaho
 43    insurance code except as expressly provided in this chapter.
 44        (4)  The plan shall provide to each employer participant and to each  pro-
 45    spective  employer  participant  a written notice stating that the plan is not
 46    insurance and does not participate in the state guaranty association.
 47        41-4104.  QUALIFICATIONS FOR REGISTRATION. No joint  public  agency  self-
 48    funded plan shall register, and the director shall not register a joint public
 49    agency self-funded plan, which is not qualified as provided in this section.
 50        (1)  The joint powers agreement must require all contributions to be paid
 51    in advance and to be deposited in and disbursed from a trust fund duly created
 52    and existing under an adequate written irrevocable trust agreement between the
 53    employer or employers and the board.
  1        (2)  The plan must:
  2        (a)  Have,  or  provide  for,  a board of trustees in accordance with this
  3        chapter for the administration of the plan;
  4        (b)  Require that all members of the joint powers  agreement  comply  with
  5        the provisions of the joint powers agreement;
  6        (c)  Provide that the administrator or board on behalf of the plan, as the
  7        case  may  be,  shall  furnish  to each employee-beneficiary of the plan a
  8        written statement or schedule adequately and clearly stating all  benefits
  9        currently  allowable under the plan, together with all applicable restric-
 10        tions, limitations, and exclusions, and the procedure for filing  a  claim
 11        for benefits; and
 12        (d)  Otherwise be in compliance with the provisions of this chapter.
 13        (3)  The  allocated  trust fund must be actuarially sound; that is, assets
 14    and income of the fund must be adequate under reasonable estimates for payment
 15    of all benefits promised to beneficiaries by the plan. In determining  actuar-
 16    ial soundness the director shall also give due consideration to:
 17        (a)  Applicable stop-loss insurance provided or to be provided the plan by
 18        an insurer duly authorized to transact disability insurance in this state;
 19        (b)  Contracts with health care service corporations or health maintenance
 20        organizations authorized to conduct such operations in this state and cov-
 21        ering certain of the promised benefits;
 22        (c)  Other applicable insurance or guarantys; and
 23        (d)  The  nature  of  the participating entities and other plan factors or
 24        provisions for prevention or reduction of adverse  selection  against  the
 25        plan by those otherwise eligible to become beneficiaries.
 26        (4)  The  plan  shall  maintain  aggregate stop-loss coverage and specific
 27    stop-loss coverage provided by an insurance  company  authorized  to  transact
 28    insurance in this state in accordance with the annual actuarial opinion of the
 29    plan.
 30        41-4105.  APPLICATION  FOR REGISTRATION. (1)  Application for registration
 31    of a joint public agency self-funded plan for public agencies shall be made to
 32    the director, on forms furnished and designed by him. The application shall be
 33    signed and verified by at least two (2) of the board members.
 34        (2)  The application shall be accompanied by:
 35        (a)  A copy of the joint powers agreement under  which  the  joint  public
 36        agency self-funded plan will exist and operate;
 37        (b)  A  copy  of the proposed written statement of benefits referred to in
 38        section 41-4104(2), Idaho Code;
 39        (c)  A financial statement of the trust fund, if already in existence  and
 40        operating on July 1, 2006. The statement shall be certified by an indepen-
 41        dent  certified public accountant according to generally accepted account-
 42        ing principles;
 43        (d)  If not already in existence, a written statement of  reasonably  pro-
 44        jected  income  and  disbursements  of  the trust fund for the twelve (12)
 45        month period commencing with date of  application  and  showing  also  the
 46        amount projected as of the end of such  period for claims incurred and not
 47        paid and incurred and not reported as certified by an actuary having expe-
 48        rience  in  establishing  rates for a self-funded plan and the health ser-
 49        vices being provided, and who is also a fellow of the society  of  actuar-
 50        ies, a member of the American academy of actuaries, or an enrolled actuary
 51        under the employment retirement income security act of 1974;
 52        (e)  If not already in existence, a copy of a business plan;
 53        (f)  A copy of an actuarial study determining adequate rates for the plan.
 54        The  rates shall not be less than the sum of projected incurred claims for
  1        the year plus costs of operation plus a reasonable portion  of  any  prior
  2        year deficiency less any excess surplus; and
  3        (g)  Such other relevant documentation and information as the director may
  4        reasonably require considering that these entities are public agency plans
  5        and not private insurance companies.
  6        (3)  At  the time of filing the application the applicant shall pay to the
  7    director a nonrefundable filing fee as provided for by rule.
  8        (4)  The director shall transmit and account for all fees received by  him
  9    hereunder as provided in section 41-406, Idaho Code.
 10        41-4106.  GRANT  OR  DENIAL OF APPLICATION. The director shall act upon an
 11    application for registration of a joint public agency  self-funded  plan  with
 12    all  reasonable promptness. He may make a reasonable investigation of the pro-
 13    posal from the public agency. If the director finds that  the  application  is
 14    complete and that the plan meets the qualifications stated in section 41-4104,
 15    Idaho Code, he shall issue and deliver a certificate of registration in appro-
 16    priate form to the applicant; otherwise, the director shall refuse to register
 17    the plan and shall give written notice of such refusal to the applicant, stat-
 18    ing the reasons therefor.
 19        41-4107.  TRUST  FUND  --  POWERS.  In addition to the inherent applicable
 20    powers of its public agency members and those of a joint  powers  entity,  the
 21    trust fund of a joint public agency self-funded plan shall have power:
 22        (1)  To have and use an appropriate descriptive name;
 23        (2)  To sue and be sued in its own name;
 24        (3)  To  contract  in its own name. All such contracts in writing shall be
 25    signed by the chairman of the board or his or her designee;
 26        (4)  To borrow money and give security therefor; and
 27        (5)  To engage exclusively in transactions authorized or required by  this
 28    chapter, or reasonably incidental thereto.
 29        41-4108.  TRUST  FUND  LIABILITY.  (1)  The  trust  fund of a joint public
 30    agency self-funded plan shall be legally liable for payment of all  applicable
 31    benefits stated in the statement or schedule of benefits in effect at the time
 32    a  claim thereunder arises and subject to the terms of the joint powers agree-
 33    ment.
 34        (2)  Funds in the trust fund are fiduciary funds, and are not  liable  for
 35    any  obligation  of  any employer participant in the plan, nor subject to gar-
 36    nishment or levy for the obligation of the beneficiary.  This  subsection  (2)
 37    shall  not  be  deemed  to  prohibit  levy upon the trust fund by any provider
 38    thereof, or its assignee, for health care services rendered a  beneficiary  if
 39    the trust fund has theretofore agreed in writing to pay for the same direct to
 40    such provider.
 41        41-4109.  INVESTMENT  OF TRUST FUND. (1) The board may invest reserves and
 42    other funds available for the purpose in the trust  fund  of  a  joint  public
 43    agency self-funded plan in the following kinds of investments only:
 44        (a)  General obligations of the United States government, or of any state,
 45        district, commonwealth or territory of the United States, or of any munic-
 46        ipality, county, or other political subdivision or agency thereof.
 47        (b)  Obligations,  the payment of principal and interest of which is guar-
 48        anteed by any such government or agency.
 49        (c)  Corporate bonds and  similar  obligations  meeting  the  requirements
 50        specified  for investment of funds of insurers under section 41-711, Idaho
 51        Code.
  1        (d)  Collateral loans, payment of principal and interest of which is  ade-
  2        quately  secured  by  securities  in  which  the trust fund could lawfully
  3        invest directly.
  4        (e)  Deposits, savings accounts, and share accounts in  established  banks
  5        and savings and loan associations located in the United States.
  6        (2)  In addition to investments excluded under subsection (1) of this sec-
  7    tion, the board is expressly prohibited from investing trust fund moneys in:
  8        (a)  Any loan to or security of any employer participating in the plan, or
  9        to  or  of  any  officer,  director,  subsidiary  or affiliate of any such
 10        employer.
 11        (b)  The security of any person in which a member of the  board,  adminis-
 12        trator,  or  any  consultant of the plan has a direct or indirect material
 13        pecuniary interest.
 14        (c)  Real estate or loans thereon.
 15        (d)  Any personal loan, other than a collateral loan referred to  in  sub-
 16        section  (1)(d)  of this section, but subject to paragraphs (a) and (b) of
 17        this subsection (2).
 18        (3)  All such investments shall be made and held in the name of the  trust
 19    fund,  and  the  interest  and yield thereon shall inure to the account of the
 20    trust fund.
 21        (4)  No investment shall be made unless authorized in writing by the board
 22    and so shown in the records of the trust fund.
 23        (5)  Any person who authorizes any investment  of  trust  fund  moneys  in
 24    violation  of  this  section  shall, in addition to other penalty therefor, be
 25    liable for all loss suffered by the trust fund on account of the investment.
 26        (6)  No investment made in violation of this section shall  constitute  an
 27    "asset" in any determination of the financial condition of the trust fund.
 28        41-4110.  RESERVES.  (1)  A  joint  public  agency  self-funded plan shall
 29    establish and maintain in its trust fund the following reserves:
 30        (a)  A reserve in an amount as certified by a member of the American acad-
 31        emy of actuaries as being necessary for  payment  of  claims  against  the
 32        trust  fund  for benefits, including both claims reported and not yet paid
 33        and claims incurred but not yet reported. Any joint  public  agency  self-
 34        funded  plan  in  existence  as of July 1, 2006, shall also have three (3)
 35        years from the effective date of this act to fund the applicable reserves.
 36        (b)  If under the plan periodic contributions of either  the  employer  or
 37        employees  to  the  trust  fund  are payable less frequently than monthly,
 38        there shall be a reserve for unearned contributions as computed  pro  rata
 39        on  the basis of the unexpired portion of the period for which the contri-
 40        bution has been paid.
 41        (2)  In any determination of the financial condition of the trust fund the
 42    claims reserve and reserve for unearned contributions shall constitute liabil-
 43    ities.
 44        41-4111.  RECORDS AND ACCOUNTS -- ANNUAL STATEMENT. (1)  The  board  of  a
 45    joint public agency self-funded plan shall cause full and accurate records and
 46    accounts  to be entered and maintained covering all financial transactions and
 47    affairs of the trust fund.
 48        (2)  Within ninety (90) days after the close of a fiscal year of the plan,
 49    the board shall make an annual statement in writing summarizing the  financial
 50    transactions  of  the trust fund for such fiscal year and its financial condi-
 51    tion at the end of such year in accordance with  this  chapter  and  generally
 52    accepted  and  applicable accounting principles. The statement shall be in the
 53    form as prescribed by the director and the financial information therein shall
  1    be certified by an independent public accountant by whom such information  was
  2    prepared.  The  board shall keep a copy thereof on file in the business office
  3    of the plan where it shall be available at all reasonable times for  a  period
  4    of  not  less  than  three  (3)  years for review by any beneficiary and shall
  5    deliver a copy of a financial summary to each participating employer.
  6        (3)  On or before expiration of such ninety  (90)  day  period  the  board
  7    shall cause an original of the annual statement to be filed with the director.
  8    The  joint  public  agency self-funded plan shall not be subject to any filing
  9    fees provided for by rule. The director may grant a thirty (30) day  extension
 10    of the time for filing the annual statement.
 11        (4)  The board shall also file quarterly supplemental financial reports in
 12    a form and at the times prescribed by the director.
 13        (5)  The annual and quarterly reports required under this section shall be
 14    public records.
 15        41-4112.  TAXES  --  EXEMPTION. Any plan established under this chapter is
 16    not subject to any state tax, including a premium or maintenance tax.
 17        41-4113.  EXAMINATION OF BOOKS,  RECORDS  AND  ACCOUNTS.  (1)  The  books,
 18    records,  accounts and affairs of a joint public agency self-funded plan shall
 19    be subject to examination by the director, by competent examiners duly  autho-
 20    rized  by  him  in  writing,  at such times or intervals as the director deems
 21    advisable. The purposes of the examination shall be to determine compliance of
 22    the plan with applicable laws, financial condition and actuarial  adequacy  of
 23    its  trust  fund,  treatment  accorded  beneficiaries, and as to other factors
 24    materially related to the plan's management and operation.
 25        (2)  The board shall promptly make the books, records and accounts of  the
 26    plan  and  trust fund available in Idaho to the examiner and otherwise facili-
 27    tate the examination.
 28        (3)  The examiner shall conduct the examination  expeditiously,  make  his
 29    report  of the examination in writing, and deliver a copy thereof to the board
 30    and to the director. The board shall have four (4) weeks after receipt of  the
 31    report  within  which to recommend to the director such corrections or changes
 32    therein as the board may deem appropriate. After making  such  corrections  or
 33    changes, if any, as he deems proper, the director shall file the report in his
 34    office  as  a  document  open to public inspection, and deliver to the board a
 35    copy of the report as so corrected or changed.
 36        (4)  Since a joint public agency self-funded plan is funded by  local  tax
 37    moneys,  the  costs of the examination shall not be borne by the plan or trust
 38    fund of the plan.
 39        41-4114.  BOARD OF TRUSTEES -- ADMINISTRATORS. (1) The trust shall be gov-
 40    erned and managed by a board of trustees. This board  shall consist of members
 41    elected by the governing boards of the member public agencies. The composition
 42    and membership of the board shall be established in the joint powers agreement
 43    between the members. The process and procedure for conducting the election and
 44    determining the members shall be set  forth  in  the  joint  powers  agreement
 45    establishing  the  plan, except that the election must be conducted, completed
 46    and results certified by December 31 of each year in  which  an  election  for
 47    members is conducted. Boards of joint public agency self-funded plans existing
 48    as of July 1, 2006, shall be deemed to be in compliance with the establishment
 49    requirements  of this chapter but shall conduct future elections in accordance
 50    with the requirements of this chapter.
 51        (2)  An individual, firm or corporation may be an administrator of a plan.
 52        (3)  The board shall cause all individuals handling receipts and disburse-
  1    ments for the trust fund to be covered under a dishonesty insurance policy  or
  2    surety bond in an amount not less than ten percent (10%) of the annual contri-
  3    butions  to  the plan or as the director may deem reasonably advisable, issued
  4    by an insurer authorized to transact such insurance in this state. This policy
  5    shall only be canceled upon giving no less than thirty (30)  days'  notice  to
  6    the board and to the director. The cost of the insurance shall be borne by the
  7    trust fund. The amount of any policy or bond required under this section shall
  8    be not less than twenty-five thousand dollars ($25,000) or more than five hun-
  9    dred thousand dollars ($500,000).
 11    ber, administrator or other person having responsibility for the management of
 12    a  joint public agency self-funded plan or the investment or other handling of
 13    plan funds shall:
 14        (1)  Receive directly or indirectly or be pecuniarily  interested  in  any
 15    fee,  commission,  compensation, or emolument, other than salary or other com-
 16    pensation regularly fixed and allowed for services regularly rendered  to  the
 17    plan,  arising out of any transaction to which the trust fund is or is to be a
 18    party;
 19        (2)  Receive compensation as a consultant to the plan while also acting as
 20    a board member or administrator, or as an employee of either; or
 21        (3)  Have any direct or indirect material pecuniary interest in  any  loan
 22    or investment of the trust fund.
 23        41-4116.  POLITICAL CONTRIBUTIONS PROHIBITED. No board shall make or know-
 24    ingly permit the making, directly or indirectly, of any political contribution
 25    by or from any joint public agency self-funded plan trust fund.
 26        41-4117.  RECOVERY  OF  DEPLETED  FUNDS.  If  after notice and hearing the
 27    director finds that any joint public agency self-funded plan  trust  fund  has
 28    been  depleted  by reason of any wrongful or grossly negligent act or omission
 29    of a board member or any other person, he shall transmit a copy of  his  find-
 30    ings  to  the  attorney  general of this state, who may bring an action in the
 31    name of the people of this state, or intervene in any action brought by or  on
 32    behalf  of  an employer or beneficiary, for the recovery of the amount of such
 33    depletion, for the benefit of the trust fund.
 34        41-4118.  TERMINATION OF REGISTRATION. (1) The director may terminate  the
 35    registration of a joint public agency self-funded plan upon written request of
 36    the board, or if he finds, after an examination, that the trust fund is insol-
 37    vent.
 38        (2)  The  director  may terminate the registration of a plan for violation
 39    of this chapter, or failure of the board to file the annual statement with the
 40    director within the time required under section 41-4111, Idaho Code, or if  he
 41    finds, after an examination of the trust fund or the plan:
 42        (a)  That the plan no longer meets the qualifications required by sections
 43        41-4101  and 41-4110, Idaho Code, and that the deficiency will not or can-
 44        not be remedied within a reasonable time;
 45        (b)  That as a matter of frequent practice the benefits  promised  by  the
 46        plan are not being fairly and promptly paid;
 47        (c)  That  the  cost of administering the plan is excessive in relation to
 48        the character and volume of service being rendered in the  administration;
 49        or
 50        (d)  That the trust fund has been subject to fraudulent or dishonest prac-
 51        tices on the part of the board, administrator, consultant, any participat-
  1        ing employer, or beneficiaries.
  2        (3)  The director shall so terminate the registration by his written order
  3    given  to  the  board and to each employer last of record a participant in the
  4    plan. The order shall state the grounds upon which it is made and  its  effec-
  5    tive date. The order shall be subject to judicial review in the same manner as
  6    applies to official orders of the director in general.
  7        41-4119.  LIQUIDATION  OF TRUST FUND. (1) Upon termination of registration
  8    the trust fund of a joint public agency self-funded plan shall be liquidated.
  9        (2)  Liquidation of a solvent joint public agency self-funded  plan  shall
 10    be  conducted by its trustee under a plan of liquidation in writing filed with
 11    the director, found by the director to be fair and equitable  to  all  persons
 12    having  a  pecuniary interest in the trust fund, and approved by him. Any bal-
 13    ance remaining after payment or adequate provision for all claims and  charges
 14    against  the trust fund shall be disposed of in such manner as is provided for
 15    in the plan of liquidation. Unless under the plan of liquidation liability for
 16    all unpaid claims and obligations of the trust fund has been assumed by  other
 17    financially  responsible person or persons, the existence of surplus funds for
 18    such disposition shall not be determined prior to expiration of two (2)  years
 19    after termination of the registration.
 20        (3)  The  liquidation of an insolvent joint public agency self-funded plan
 21    shall be carried out by the director in accordance with chapter 33, title  41,
 22    Idaho Code (supervision, rehabilitation and liquidation), and for this purpose
 23    the  joint  public  agency self-funded plan shall be deemed to be an insolvent
 24    domestic insurer.
 25        41-4120.  RULES. (1) The director may make reasonable rules necessary  for
 26    or  as  an  aid to effectuation of any provision of this chapter. No such rule
 27    shall extend, modify, or conflict with any provision of this chapter  and  the
 28    reasonable  implications  thereof  nor any of the administrative, statutory or
 29    constitutional rights and responsibilities of a public agency.
 30        (2)  Such rules, or any amendment thereof, shall be made by  the  director
 31    in accordance with chapter 52, title 67, Idaho Code.
 32        41-4121.  OTHER  PROVISIONS  APPLICABLE.  Chapter  2, title 41, Idaho Code
 33    (the director of the department of insurance), chapter  13,  title  41,  Idaho
 34    Code  (trade  practices  and  frauds), and sections 41-2141(1) and 41-2216(1),
 35    Idaho Code (coordination of benefits, except to the extent the  rules  pertain
 36    to  medicare  coverage), to the extent applicable and not in conflict with the
 37    express provisions of this chapter, shall also apply  with  respect  to  joint
 38    public  agency  self-funded  plans,  and  for  the purpose such plans shall be
 39    deemed to be "insurers."
 40        41-4122.  PENALTIES. (1) Any person who  violates  or  causes  or  induces
 41    violation  of any provision of this chapter or any lawful rule of the director
 42    issued hereunder, shall be subject  to  an  administrative  penalty  for  each
 43    violation of not more than one thousand dollars ($1,000) for an individual and
 44    not more than five thousand dollars ($5,000) for any entity.
 45        (2)  Any  person  who makes a false statement or representation of a mate-
 46    rial fact, knowing it to be false, or who knowingly fails to disclose a  mate-
 47    rial  fact  in  any application, examination, or statement required under this
 48    chapter or by lawful rule of the director hereunder, shall be subject to  pen-
 49    alty as provided in subsection (4) of this section.
 50        (3)  Any person who makes a false entry in any book, record, statement, or
 51    report  required  by this chapter or lawful rule of the director thereunder to
  1    be kept by him for any joint public agency self-funded plan,  with  intent  to
  2    injure  or  defraud  the fund or any beneficiary thereunder, or to deceive any
  3    person authorized or entitled to examine the affairs of the   plan,  shall  be
  4    subject to penalty as provided in subsection (4) of this section.
  5        (4)  For  each  such violation, act or omission referred to in subsections
  6    (2) and (3) of this section, unless greater penalty is provided therefor under
  7    any other applicable law, the offender shall upon conviction thereof  be  sub-
  8    ject  to  a  fine  of  not more than fifteen thousand dollars ($15,000) and to
  9    imprisonment for not more than fifteen (15) years, or to both  such  fine  and
 10    imprisonment.
 12    Every  joint  public agency self-funded plan issued in this state or providing
 13    coverage to any covered family residing within this  state,  shall  contain  a
 14    provision  granting  immediate  accident and sickness coverage, from and after
 15    the moment of birth, to each newborn child or infant of  any  covered  family,
 16    including a newborn child placed with the adoptive covered family within sixty
 17    (60)  days of the adopted child's date of birth. Coverage under the joint pub-
 18    lic agency self-funded plan for an adopted newborn child placed with the adop-
 19    tive covered family more than sixty (60) days after the birth of  the  adopted
 20    child  shall  be from and after the date the child is so placed. Coverage pro-
 21    vided in accordance with this section shall include, but not  be  limited  to,
 22    coverage  for  congenital anomalies. For the purposes of this section, "child"
 23    means an individual who has not reached eighteen (18) years of age as  of  the
 24    date  of the adoption or placement for adoption. For the purposes of this sec-
 25    tion, "placed" shall mean physical placement in the care of the adoptive  cov-
 26    ered  family,  or  in  those circumstances in which such physical placement is
 27    prevented due to the medical needs of the child requiring placement in a medi-
 28    cal facility, it shall mean when the adoptive covered family signs  an  agree-
 29    ment  for  adoption  of  such  child and signs an agreement assuming financial
 30    responsibility for such child. Prior to legal finalization  of  adoption,  the
 31    coverage  required  under  the provisions of this subsection (1) as to a child
 32    placed for adoption with a covered family continues in the same manner  as  it
 33    would  with  respect to a naturally born child of the covered family until the
 34    first to occur of the following events:
 35        (a)  The date the child is removed permanently from that placement and the
 36        legal obligation terminates; or
 37        (b)  The date the covered family rescinds, in writing,  the  agreement  of
 38        adoption or agreement assuming financial responsibility.
 39        No  such  plan  may  be  issued  or amended if it contains any disclaimer,
 40    waiver, or other limitation of coverage relative to the coverage or insurabil-
 41    ity of newborn or adopted children or infants of a covered family covered from
 42    and after the moment of birth that is inconsistent with the provisions of this
 43    section.
 44        (2)  An insurer shall not restrict coverage under a  joint  public  agency
 45    self-funded  plan  of  any dependent child adopted by a participant or benefi-
 46    ciary, or placed with a participant or beneficiary for adoption, solely on the
 47    basis of a preexisting condition of the child at  the  time  the  child  would
 48    otherwise  become  eligible  for  coverage  under the plan, if the adoption or
 49    placement for adoption occurs while the participant or beneficiary is eligible
 50    for coverage under the plan.
 51        (3)  No joint public agency self-funded plan which provides maternity ben-
 52    efits for a person covered  continuously  from  conception  shall  be  issued,
 53    amended,  delivered,  or  renewed  in this state if it contains any exclusion,
 54    reduction, or other limitations as to coverage,  deductibles,  or  coinsurance
  1    provisions  as  to  involuntary complications of pregnancy, unless such provi-
  2    sions apply generally to all benefits paid under the plan. If a  fixed  amount
  3    is  specified  in such plan for surgery, the fixed amounts for surgical proce-
  4    dures involving involuntary complications of pregnancy shall  be  commensurate
  5    with  other  fixed amounts payable for procedures of comparable difficulty and
  6    severity. In a case where a fixed amount is payable  for  maternity  benefits,
  7    involuntary complications of pregnancy shall be deemed an illness and entitled
  8    to  benefits  otherwise provided by the plan. Where the plan contains a mater-
  9    nity deductible, the maternity deductible shall apply only to expenses result-
 10    ing from normal delivery and cesarean section delivery; however, expenses  for
 11    cesarean  section  delivery  in  excess  of the deductible shall be treated as
 12    expenses for any other illness under the plan.
 13        For purposes of this subsection (3), involuntary  complications  of  preg-
 14    nancy  shall  include,  but not be limited to, puerperal infection, eclampsia,
 15    cesarean section delivery, ectopic pregnancy, and toxemia.
 16        All plans subject to this subsection (3) and issued,  amended,  delivered,
 17    or renewed in this state shall be construed to be in compliance with this sec-
 18    tion,  and  any provision in any such plan which is in conflict with this sec-
 19    tion shall be of no force or effect.
 20        41-4124.  SERVICES PROVIDED BY GOVERNMENTAL ENTITIES. (1) From  and  after
 21    July 1, 2006, no joint public agency self-funded plan shall be issued in Idaho
 22    which excludes from coverage services rendered the subscriber while a resident
 23    in  an  Idaho state institution, provided the services to the subscriber would
 24    be covered by the contract if rendered to him outside an Idaho state  institu-
 25    tion.
 26        (2)  From  and after July 1, 2006, no joint public agency self-funded plan
 27    may contain any provision denying  or  reducing  benefits  otherwise  provided
 28    under the policy for the reason that the person insured is receiving health or
 29    mental  health  care  or  developmental services provided by the department of
 30    health and welfare, whether or not the department of health and welfare  bases
 31    its  charges  for  such  services on the recipient's ability to pay. Provided,
 32    nothing in this section  shall  prevent  the  issuance  of  a  contract  which
 33    excludes  or  reduces  benefits where the charge level or amount of the charge
 34    levied by a governmental entity for such services would vary or be affected in
 35    any way by the existence of coverage under a joint public  agency  self-funded
 36    plan.
 37        41-4125.  MAMMOGRAPHY COVERAGE. (1) From and after July 1, 2006, all joint
 38    public agency self-funded plans which provide coverage for the surgical proce-
 39    dure known as a mastectomy which are delivered, issued for delivery, continued
 40    or  renewed  in  this  state  shall provide minimum mammography examination or
 41    equivalent examination coverage. Such coverage shall include at least the fol-
 42    lowing benefits:
 43        (a)  One (1) baseline mammogram for any  woman  who  is  thirty-five  (35)
 44        through thirty-nine (39) years of age.
 45        (b)  A  mammogram  every  two  (2)  years  for any woman who is forty (40)
 46        through forty-nine (49) years of age, or more frequently if recommended by
 47        the woman's physician.
 48        (c)  A mammogram every year for any woman who is fifty (50) years  of  age
 49        or older.
 50        (d)  A  mammogram  for  any  woman desiring a mammogram for medical cause.
 51        Such coverage shall not exceed the cost of the examination.
 52        (2)  As used in this section, "mastectomy" means the  removal  of  all  or
 53    part of the breast for medically necessary reasons as determined by a licensed
  1    physician.
  2        (3)  Nothing  in this section shall apply to specified accident, specified
  3    disease, hospital indemnity, medicare supplement, long-term care or other lim-
  4    ited benefit health insurance policies.

Statement of Purpose / Fiscal Impact

                        STATEMENT OF PURPOSE

                            RS 16175C2

This legislation would create a new chapter of the insurance code to
regulate self-funded health plans offered to employees of governmental
entities when the self-funding arrangement involves more than one
employer.  Currently a self-funded health plan offered by a group of
governmental entities to their employees would be regulated under
Chapter 40 of Title 41, Idaho Code.  If the plan includes only
counties, there is no regulation of the plan by the Department of
Insurance due to an existing exemption in Chapter 40 for self funded
plans offered by a county.  This legislation would make all self-
funded multiple employer plans offered by governmental entities in
Idaho, including a plan made up exclusively of counties, subject to
regulatory oversight by the Department of Insurance under a special
chapter of the code.  It would not affect single employer plans.

The legislation would require, among other things, that multiple
governmental employer plans file annual financial statements that have
been prepared by a CPA with the Department of Insurance, that they
rely on opinions from a qualified actuary in establishing rates and
setting aside appropriate reserves to cover expected losses, that the
plans have appropriate stop loss coverage in place to protect against
catastrophic losses and that all plan funds be maintained in a trust
account.  The level of regulation imposed by this legislation is
significantly less than the level of regulation applied to insurance
companies, but greater than what is applied to multiple employer plans
under current law.

                              FISCAL NOTE

This bill will create some added costs to the Department of Insurance
because it requires that the Department bear all costs associated with
examining the public agency plans covered by this chapter. However,
because the Department is funded from fee revenue rather than the
general fund, the increased costs will impact the general fund only to
the extent that there is a reduction in any surplus fee revenue that
would otherwise flow to the general fund. Examination costs for a
single entity would generally be expected to run between five and ten
thousand dollars every three years. This bill also exempts public
agency plans from all state taxes. Currently, there is only one
existing plan that would fall within this chapter. It is not regulated
by the Department of Insurance and does not pay any premium tax or
subscriber tax through the Department of Insurance, so the exemption
would not create any loss of premium tax or subscriber tax to the
general fund.

Name: Representative Max Black 
      Representative Bill Deal
Phone: (208) 332-1000

STATEMENT OF PURPOSE/FISCAL NOTE                              H 825